My blog focuses on Financial Literacy/Money. While qualifying for a mortgage and paying it off are major financial moves, many people also face foreclosure and must know how to navigate it. The following contributed post is entitled, What To Do When Facing Foreclosure.
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Facing foreclosure on a property is never a pleasant experience. Like most people, you’d rather stay in your home, and you don’t like the idea of being kicked out.
When these situations arise, it can be tempting to panic. However, we’d caution against that. Instead, we suggest taking the most prudent action to increase the likelihood that you can stay in your home.
Contact Your Lender First
Start by contacting your lender as soon as you can and informing them of the situation. Tell them what’s happened and that you’re finding it much more challenging to meet your home payments.
Usually, if you give them enough advanced warning, you can get them to explain options, like loan modification. These will extend the length of the loan and get you to pay back over a longer period, reducing the monthly payments you have to meet.
Understand The Mortgage Terms
At the same time, you should also understand the mortgage terms. Knowing these reduces risks considerably and allows you to assess the cost of getting out of your current deal.
Many mortgages these days are flexible and have special terms that allow you to make significant modifications. These can be a lot of fun to explore and something you’ll want to check out if you’re in a foreclosure situation.
Look For Repayment Plans
If you can adjust your repayment plans, that’s also a good step to take. You want to make sure that you are doing everything you can right now to protect your cash flow.
Part of this might be to request forbearance. Banks and lenders will sometimes grant these if there’s been a sudden change in circumstance and you’re not as financially secure as you were.
You can also ask the bank if you can use a special payment mechanism to catch up on missed payments over time. Again, these can spread the cost of the mortgage more and give you a chance to adjust your approach.
Consult A Lawyer
If you can speak to a foreclosure attorney, that’s even better. These professionals really understand the law and how it works, giving you many more opportunities to find solutions.
Foreclosures can sometimes come along faster than you anticipate, which throws you off track. Using an attorney can help in these situations because they can protect your rights and ensure you take all necessary legal steps.
Think About Selling Your Home
Another approach is to simply sell your home. Doing this will prevent you from having to deal with the foreclosure costs.
When you sell, you first pay off the mortgage and then you get to keep the extra equity in the property. You can then use this money to downsize substantially and start a new life without the same level of material possessions.
Explore Bankruptcy
Finally, you might want to look into bankruptcy options with a lawyer. Knowing what paths are available to you is essential if you’re in a lot of debt and don’t know what to do about it.